Hyperlocal Publishers Need to Up Ad Accountability

A recent Business Insider report noted that local merchants can get placement on Patch for 1/10 the price on the rate card, by simply purchasing a Google Adwords ad. This isn’t a revelation, but it confirms the reality of excess premium inventory that plagues traditional media display advertising — and the ease of gaming the media buy system to get the lower rack rate. The trick is to purchase a Google Adwords ad, target the zip code of the desired Patch.com site, and specify Patch.com site as a “managed placement” in the Display Network.

According to a Patch salesman quoted in the BI article, his client qualified for a $2 CPM rack rate that beat the salesman’s $20 book rate.

The worst part is my client is getting ads at a $2 CPM and getting impressions. I saw his dashboard. The whole point of Patch was that it was local but Google just has you put in your zip codes and then your ads launch.

My client did the math and they paid $20 for a cpm when I sold it.

I don’t know how Google gets Patch ads cheaper than I do but I can’t do this any more. It isn’t fair to the clients that pay the whole amount from me.

The divide between book rate and rack rate threatens publisher credibility at a time when local businesses are demanding two types of advertiser accountability. First, they want relevancy: they want to know that their ads are being displayed only to their target customer bases, not being spread scattershot to the annoyance of the general public. Second, they want to pay only for results: CPM-based display advertising, like commercials and banner ads, focuses on traffic quantity over traffic quality and delivers neither the targeted relevancy and nor a guaranteed performance based pricing schema beyond “minimum pageviews.”

Google Adwords, Twitter’s new Promoted Tweets product for SMBs, Facebook ads, and even Groupon, all deliver relevant geo-targeted consumers on a pay-per-performance basis. These social media ad networks will pressure traditional local publishers to match their offerings on price and accountability. The inherent dilemma is that local publishers need to connect to these established social networks for the consumer profiling required to deliver relevant advertising. How do publishers staunch the flow of local ad dollars to these ad networks when they can’t offer the same kind of Facebook profile matching services?

Media companies are, of course, building their own marketing services groups to show their clients how to advertise, and use social media. The Hearst Corporation, the owner of media properties including the San Francisco Chronicle/SFGate.com, developed Local Edge, a Hearst Media Services company, to provide a comprehensive portfolio of local business marketing services ranging from Search Engine Marketing to premium directory listings. Local Edge has succeeded in signing on the media marketing arms of other publishers, like DMNMedia tied to the Dallas Morning News.

Beyond big media’s foray into developing a new marketing services layer, a new generation of startups will help local publishers compete by adding value to the ad placement supply chain. Patch.com and a number of media companies, have partnered with PaperG to facilitate the ad creation process in real time so their sales teams can accelerate closing the deal with local merchants. Many publishers work with white label deals publishers to deliver daily deals to their readers. We see new social media marketing agencies like Hearsay Social and Main Street Hub competing with big media to supply local business services. In sum, these solutions make it easier for small business to participate in a new world of social marketing that extends beyond the banner ad.

“The divide between book rate and rack rate threatens publisher
credibility at a time when local businesses are demanding two types of
advertiser accountability. First, they want relevancy: they want to know
that their ads are being displayed only to their target customer bases,
not being spread scattershot to the annoyance of the general public.
Second, they want to pay only for results: CPM-based display
advertising, like commercials and banner ads, focuses on traffic
quantity over traffic quality and delivers neither the targeted
relevancy and nor a guaranteed performance based pricing schema beyond
“minimum pageviews.””

New parlor game: How many false assertions without any empirical evidence to back it up can you pack into a single paragraph?

For small business clients like mine, it is important for them to be able to spend their marketing dollars quite wisely and effectively. New media and social media bring cost effective exposure that can quickly generate a return on investment with the right technology. There are plenty of “schemers” out on the market that can quickly erode these financial advantages. Publishers must realize that small businesses are starting to focus on traffic quality and pay-per-performance metrics, and if publishers don’t get this, they are doomed.

Personally, I’d prefer to strategically reach less folks who actually may be interested in what my company has to offer than spraying and praying to a much larger yet non-relevant audience. Location + topical relevance are of the utmost importance to me. Would I be willing to pay to reach a hyperlocal consumer if I knew that the type of content they were looking for was exactly the type of unique content I was creating, I think so.